Mr. Dimon has been increasingly vocal on technology. Last year, he warned in his annual shareholder letter that “Silicon Valley is coming,” with “hundreds of startups with a lot of brains and money working on various alternatives to traditional banking.”

Later last year, he said at an investor conference that while bitcoin probably doesn’t have much of a future, the blockchain technology that supports it “might very well be very useful” in tracking ownership of some securities and cutting down the time it takes to transfer a loan.

In its new blockchain plan, J.P. Morgan plans to expand its testing to real trades as soon as the third quarter for certain corporate and investment bank clients including some hedge funds, said Sanoke Viswanathan, chief administrative officer at J.P. Morgan’s corporate and investment bank. That also requires regulatory approvals, which could take months.

J.P. Morgan is also participating in several industry groups that are focused on developing blockchain as a way to improve efficiency in lending and trading, among other things. Those groups include R3, the nonprofit Linux Foundation and Digital Asset Holdings, which is led by former J.P. Morgan executive Blythe Masters.

Eoin Treacy's view

Here is a link to the full article.

It isn’t just start-ups in Silicon Valley that are looking on banking as a sector ripe for disruption. Fees are high, service is slow and the online experience provided by most banks leaves a lot to be desired. For too long banks have relied on rules and regulations they helped to create a shroud of protection that stifled competition. 

That is less of an issue today with the internet and mobile technology enabling nationwide competition instantaneously. The evolution of privately held Quicken Loans in the USA is just one example. It wholly online, is one of the fastest growing mortgage lenders and competes in all 50 states and comes in cheaper than just about all high street banks.   

Banks now need to hold additional Tier 1 capital, still have issues with outstanding bad loans, are losing on money market funds, struggling with downward sloping yield curves and looming bankruptcies in the energy sector. However if they do not innovate to provide clients with a cheaper, faster, secure service they will lose their most valuable resource which is their customer base of depositors. This is all the more important today because the Millenial generation has overtaken the Baby Boomers as the largest US demographic. Companies will have little choice but to tailor their offerings to these younger people if they wish to thrive. 

Blythe Masters was one of the creators of Credit Default Swaps and left JPMorgan a few years ago to pursue blockchain technology. Digital Asset Holdings is not yet revenue positive but it does help to illustrate how much potential serious people on Wall Street attach to blockchain technology. This article posted today on CoinDesk may be of interest but here two important quotes from Masters:

"There's the fact that there are entire business models that have the risk of being disintermediated if a competitor of yours manages to take full advantage of this technology before you’ve fully appreciated or deployed it."

And

"The advantage of being an incumbent rather than a newcomer is that the economies of scale are gigantic," 

JPMorgan (Est P/E 9.75, DY 3.13%) remains a relative outperformer in the banking sector. In absolute terms it has firmed in the region of the 2014 and 2015 lows around $55. It needs to hold the early February low if support building is to be given the benefit of the doubt.